Softer vegetable costs, particularly that of kitchen staples, helped ease retail inflation to a five-month low of 4.31% in January 2025 and costs are anticipated to fall additional in coming months. Whereas January’s numbers again the choice of the Financial Coverage Committee to chop charges, analysts nevertheless warning that going ahead the depreciating rupee can also have an effect on the financial coverage.
In accordance with official knowledge launched on Wednesday, client worth index-based inflation eased to 4.31% in January from 5.22% in December. It was at 5.1% in January 2024. Client meals worth inflation additionally cooled to six.02% in January this 12 months from 8.39% in December 2024.
Inflation within the meals and drinks basket additionally eased to five.68% in January from 7.69% within the earlier month. Vegetable inflation remained excessive however eased to 11.35% in January from 26.56% in December.
With costs seen to proceed moderating in February, retail inflation is seen to anticipated to ease additional. ICRA has pegged CPI inflation in February at 4%. India Rankings and Analysis additionally forecast CPI inflation in February and March 2025 to be within the 3.9%-4% vary.
“As per the early knowledge for February 2025 (till February 10, 2025), the typical retail costs of 14 of the 22 important commodities (barring wheat, sugar, and most edible oils) softened on a sequential foundation within the month. The appreciable moderation in vegetable costs is more likely to augur effectively for the year-on-year meals and drinks inflation print for the month, which is predicted to ease to a six-month low of about 5.2% in February 2025,” stated Aditi Nayar, Chief Economist and Head of Analysis and Outreach, ICRA.
Suman Chowdhury, Govt Director & Chief Economist, Acuité Rankings & Analysis famous that the steep correction in tomato, onion, and potato costs—key CPIF parts—has contributed to this downward trajectory in meals inflation. “Moreover, a decline in pulses inflation, supported by tariff-free imports and powerful harvest expectations, has additionally helped ease the meals worth pressures,” he stated. Trying forward, rabi sowing has been as per expectations and vegetable costs have continued to drop additional in February 2025, which ought to assist preserve the headline inflation in test for the approaching two months, he stated.
Analysts have nevertheless warned that edible oil costs, with retail inflation within the commodity rising to fifteen.64% in January might pose a problem in coming months together with larger imported inflation as a result of rupee fall.
Core inflation noticed a marginal uptick to three.7% in January from 3.6% within the earlier month.
The RBI has pegged retail inflation within the fourth quarter of the fiscal at 4.4% and expects it to ease to 4.5% within the first quarter of FY26. The following assembly of the RBI’s MPC can be held in April.
Paras Jasrai, Senior Analyst, India Rankings famous that the longer term coverage easing can be knowledge dependent. “The financial coverage motion in April 2025 financial coverage depends on foreign money motion and liquidity within the system,” he stated.
Upasna Bhardwaj, Chief Economist, Kotak Mahindra Financial institution expects the inflation trajectory to stay benign within the months forward to offer room for one more 25 foundation factors of charge minimize by the MPC. “Nevertheless, the tempo of INR depreciation will have to be intently watched for spillovers on home inflation,” she famous.
